Here’s What Just Happened With Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)

The major news today out of the biotechnology space is that development stage company Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) has failed to hit on a primary endpoint associated with one its lead investigational assets, a drug called aceneuramic acid extended release (Ace-ER).

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The company was trialing the drug as a potential treatment for a condition called GNE Myopathy (GNEM), which is a severe muscle disease that primarily affects adults. It’s quite a rare condition and it is rooted in the deficiency of an enzyme called GNE/MNK, and it is also often confused for conditions with similar symptoms – things like Limb-Girdle Muscular Dystrophy, Charcot-Marie-Tooth disease or Miyoshi myopathy.

To explain the science that underpins the condition briefly, the enzyme deficiency results in lower levels of something called sialic acid, a substance that helps muscle proteins function properly. Without sufficient sialic acid, muscles begin to weaken, resulting in loss of strength and muscle function.

The mechanism of action on which Ultragenyx based this asset is relatively simple – the aceneuramic acid element of the drug name refers to what is basically an oral formulation of the sialic acid that causes this disease. The company created the drug to allow for extended release of the active compound, with the hope being that extended release introduction would translate to a rebalancing of sialic acid levels to normal and a reversal (or at least, a halting in the degeneration) of the muscle weakness that characterizes the condition.

As per the latest announcement, however, this doesn’t look to be the case.

The study enrolled just under 90 patients and randomized them one-to-one to receive a daily dose of the drug in question or placebo across a 48-week period. The primary endpoint was the achieving of a statistically significant improvement in an industry standard scoring model called the upper extremity muscle composite (UEC) score and there were three separate secondary endpoints, including the lower extremity muscle strength composite score as measured by hand-held dynamometry (HHD), physical functioning using the Mobility domain of the GNE Myopathy-functional activity scale (GNEM-FAS), and a measure of muscle strength in knee extensors.

The data reported as follows from a primary endpoint perspective: UEC score (+0.74 kg, p=0.5387) for Ace-ER treated patients (n=45, -2.25 kg) and UEC score (n=43, -2.99 kg) for placebo patients. In other words, both groups saw muscle weakening and, while the active group didn’t weaken quite as much as the placebo group, the difference isn’t enough to register as statistical significance and the company can’t claim that the difference was rooted in the treatment.

All three of the above mentioned secondary endpoints also failed.

So what does this mean for Ultragenyx?

Sometimes when we see this sort of trial failure, and especially at the developing end of the biotechnology market, companies sugarcoat the failing of their assets in the press releases that detailed the outcome. This can add a degree of ambiguity to the forward path and cloud expectations somewhat. In this instance, however, that is not the case. Ultragenyx reported in the recent press release that it intends to terminate the program completely based on these data, meaning this is – for now, at least – the end of the company’s program efforts in this condition.

The news is not good for sufferers of the disease, a population that has long been crying out for a fresh alternative to the current standard of care treatment (which often don’t work or have associated with them pretty substantial side effects) and it’s also disappointing for the company and its shareholders. Markets are interpreting the release as such and Ultragenyx is trading down on the announcement.

During the pre-market session on Wednesday, the company is trading at a more than 11% discount to its Tuesday close of $58.85 a share. Year-to-date, this brings market cap to a 16.3% depreciation.

What’s next?

Ultragenyx is a multi-billion-dollar biotechnology company so one program termination isn’t going to cripple prospects. With that said, however, these late stage programs cost tens of millions of dollars to conduct in many cases and it is often shareholders that have to foot the bill for these studies by way of dilution. As such, while there remains a number of other shots on goal in Ultragenyx’s roster, don’t expect sentiment to lift too much, too fast.

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